Best Small Business Ideas You Didn’t Think of That Thrive During Economic Downturn
An entrepreneur is able to spot an opportunity in any situation, even if that situation is an economic downturn. They can assess the current situation, recognize the present need and craft a business idea or plan that will thrive under the current climate.
The nature of our economy is that it will be a constant cycle of recession and upswing. With that being said, it’s essential that an entrepreneur plans for both. There are some great bad-economy business ideas that one should consider before launching their business.
Harvard Business Review provided an in-depth analysis of the success and shortcomings of businesses after the last recession in 2007. They found that only a small number of companies — approximately 9% of their sample — flourished after a slowdown, doing better on key financial parameters than they had before it and outperforming rivals in their industry by at least 10% in terms of sales and profits growth.
Their research also found that, “Companies that master the delicate balance between cutting costs to survive today and investing to grow tomorrow do well after a recession. Within this group, a subset that deploys a specific combination of defensive and offensive moves has the highest probability — 37% — of breaking away from the pack.”
We have rounded up some of the best recession-proof business ideas to help you become one of those companies that do indeed break away from the pack and find success.
Small Businesses That Thrive During Economic Downturn
- Accounting/Financial Services: An economic downturn makes current business owners concerned about the state of their finances. They may be more inclined to hire an accounting or financial services firm to help them manage their spending and their forecasted revenue.
- Career Development/Recruitment Firm: A recession puts millions of people out of work. In fact, due to the COVID-19 pandemic, 17.8 million people are currently unemployed. Those unemployed people need plenty of assistance when it comes to finding new jobs. A career development or recruitment firm can help match people looking for work with companies that have a need. Plus, a career development firm can also offer interview coaching or resume review services to people.
- Healthcare Services: Healthcare is a basic need that people require access to for their urgent and routine physical and mental well-being. This is an industry that also tends to boom during a recession or pandemic, as we are currently witnessing with COVID-19. A healthcare-related small business could range from an online therapy platform to producing or importing medical supplies, such as masks, ventilators and sanitizers.
- Virtual Assistant: Companies that are struggling may decide to move assistant and secretarial positions from on-site, full-time staff members to virtual assistants in order to save on the salary and benefit costs. A virtual assistant can help keep a struggling business afloat by providing day-to-day support to the CEOs, founders and other company leaders.
- Tutoring Services: When a recession hits and people become unemployed, they may take it as an opportunity to continue their education. These students may need some assistance with their courses and the new material they are learning. As a tutor, you can conduct your business in-person and virtually.
- Marketing Services: Struggling businesses may recognize the need to market their services to gain more consumers and sales. Hiring a marketer or social media marketer who can help increase the business’s sales and attract new consumers is essential.
Retail and Products
- Grocery Stores: People need access to food and household items no matter the economic climate. A grocery store is an essential service that people rely on to get their weekly food, beverage and household items. We often see the shelves of grocery stores completely ravaged and empty when news of a recession, pandemic or a global crisis is about to hit. Delivery services are also exploding, expected to surge to 40 percent growth this year.
- Thrift Stores: During an economic downtown, people are hesitant to purchase high-end goods, designer fashion and new clothes and accessories since they want to be conservative about how they are spending their money. However, if they do need “new” clothes and goods, they may turn to a more affordable option to do their shopping, which means thrift stores.
- Beer, Wine and Spirits: During the last recession in 2009, beer, wine and spirit wholesalers did well. This could be due to people shying away from bars and restaurants and purchasing their alcohol for at-home cocktails as a more affordable option. Consumers will also trade down for less expensive brands in order to save money.
Ensuring the Success of Your Business During a Recession
After you start your business that can thrive during an economic downturn, you need to ensure that it’s stable and long-lasting.
There are a couple of things you should do to ensure success, including:
- Planning with a profit and growth mindset, but updating your plan on a regular basis.
- Creating a specific recession plan identifying areas where you can cut back on non-essentials.
- Tracking business performance and improving key industry metrics.
- Keeping communication open with vendors and suppliers to facilitate beneficial business agreements.
- Maintaining an enjoyable work environment.
Starting a business during an economic recession can be a successful and lucrative business for you. Choosing a business idea that can thrive in good times, as well as bad times, will help you rest easy even when a recession hits.